Boost for textile sector with import duty on over 50 products doubled - 18th July 2018

In a major relief to the domestic textile industry, the government has doubled the import duty on over 50 textile products — from fibre to apparels.

The import duty on apparels such as coat and pants, jackets, and ladies garments, which earlier was 10 per cent, will now be 20 per cent, according to the notification issued by Central Board of Indirect Taxes and Custom. Similar rates will be applicable to clothes made from jute or paper yarn, different varieties of carpets, laminated fibre and sheets made from fibres, and so on.

On some items, the rates will be 20 per cent or ₹38 per sq metre whichever is higher. According to the board, there have been 45 changes, including in specific and ad valorem rates.

Though nothing has been said about the effective date of the new rates, it is believed that the revised rates will come into effect from the date of gazette notification which is July 16, as changes in indirect taxes come into effect immediately unless specified.

Ajay Sahay, Director General, Federation of Indian Exporters (FIEO), said that such a move will affect trade done on normal tariff line. “However, imports from least developed countries such as Bangladesh are unlikely to be affected,” he said.

As per WTO norms, India will not be able to give any further incentive to the textile sector and the government has increased the import duties to encourage domestic manufacturing. This will certainly boost ‘Make in India,’ experts felt.

Cost advantage

MS Mani, Partner with Deloitte India, said the Customs duty increase on certain finished textile products would lead to a cost advantage for Indian textile manufacturing. “Many foreign companies may now consider manufacturing in India to cater to the domestic demand as well,” he added

Imports of textile yarn, fabric, made-up articles grew by 8.58 per cent to $168.64 million in June. However, exports of cotton yarn/ fabrics/made-ups, handloom products and so on grew by 24 per cent to $986.2 million. Man-made yarn/fabrics/made-ups exports grew 8.45 per cent to $403.4 million. Exports of all textile ready-made garments dipped by 12.3 per cent to $13.5 billion.

Our Coimbatore Bureau adds: The announcement brought cheer to garment exporters in the Tirupur knitwear cluster. Hailing the announcement, Raja M Shanmugham, President, Tirupur Exporters’ Association, said the hike in the basic Customs duty on import of 23 knitted garment items and one knitted fabric would help protect the domestic textile industry.

The association has been appealing for swift action in this regard as textile product imports from China, Bangladesh, Vietnam and Cambodia had increased significantly.

He specifically noted that under the South Asian Free Trade Area (SAFTA) agreement, specified garment items imported from Bangladesh were also exempted.